- Title: UK, Finland-born economists win 2016 Nobel Prize for Economics
- Date: 10th October 2016
- Summary: STOCKHOLM, SWEDEN (OCTOBER 10, 2016) (REUTERS) **** WARNING CONTAINS FLASH PHOTOGRAPHY **** ROYAL ACADEMY OF SCIENCES SECRETARY GENERAL, GORAN K. HANSSON ENTERING ROOM ROYAL ACADEMY OF SCIENCES SIGN (SOUNDBITE) (English) ROYAL ACADEMY OF SCIENCES SECRETARY GENERAL, GORAN K. HANSSON, SAYING: "The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2016 to Oliver Hart and Bengt Holmstrom for their contributions to contract theory." STILL PICTURES OF NOBEL ECONOMICS PRIZE WINNERS ON SCREEN (LEFT TO RIGHT): OLIVER HART AND BENGT HOLMSTROM NEWS CONFERENCE IN PROGRESS/ PER STROMBERG, CHAIRMAN OF THE COMMITTEE FOR THE PRIZE IN ECONOMIC SCIENCES IN MEMORY OF ALFRED NOBEL, EXPLAINING THE SCIENCE BEHIND THE PRIZE (SOUNDBITE) (English) PER STROMBERG, CHAIRMAN OF THE COMMITTEE FOR THE PRIZE IN ECONOMIC SCIENCES IN MEMORY OF ALFRED NOBEL, SAYING: "Contracts is really a very fundamental phenomenon that I think affects all of us in society." GRAPHIC ON SCREEN JOURNALIST NEWS CONFERENCE IN PROGRESS/ AUDIO OF HOLMSTROM SPEAKING ON PHONE STILL OF HOLMSTROM/ (SOUNDBITE) (English) NOBEL ECONOMICS PRIZE WINNER BENGT HOLMSTROM, SAYING, OVER THE PHONE: "The short answer is that I certainly did not expect it and least at this time. So I was very surprised and very happy of course. I think the reaction of most people is a sense of things being surreal." MEDIA REPRESENTATIVES NEWS CONFERENCE IN PROGRESS SCIENTIST BEING INTERVIEWED (SOUNDBITE) (English) TORSTEN PERSSON, MEMBER OF THE COMMITTEE FOR THE PRIZE IN ECONOMIC SCIENCES IN MEMORY OF ALFRED NOBEL, SAYING: "There are two aspects of the theory. It can help us understand why we see the contracts that we do see but we can also identify pitfalls that the contracts may not be written in the most productive way and then the theory offers a recipe for in what direction to go to write a better contract, how to design a better institution. In general, these are complex issues and the theory of Professor Holmstrom and Professor Hart gives us a toolbox with which we can systematically discuss these matters and either understand better or describe better what ought to be done." SCIENTIST BEING INTERVIEWED (SOUNDBITE) (English) TORSTEN PERSSON, MEMBER OF THE COMMITTEE FOR THE PRIZE IN ECONOMIC SCIENCES IN MEMORY OF ALFRED NOBEL, SAYING: "Professor Holmstrom's work can be used to understand how we design a bonus contract for management of a big company. Should there be such a bonus? What are the pitfalls of having a bonus? If there should be a bonus, what should we tie the bonus to? To the immediate cash flow of the company, the long-term health of the company? So how much should the company's own performance and other companies' performance be factored in? There are a multitude of questions and I think we understand such bonus payment schemes much better today than we did before this research." SCIENTISTS BEING INTERVIEWED
- Embargoed: 25th October 2016 13:25
- Keywords: Nobel economics announcement Alfred Nobel Oliver Hart Bengt Holmstrom Swedish Academy of Sciences
- Location: STOCKHOLM, SWEDEN
- City: STOCKHOLM, SWEDEN
- Country: Sweden
- Topics: Arts/Culture/Entertainment
- Reuters ID: LVA00153FAREV
- Aspect Ratio: 16:9
- Story Text: British-born Oliver Hart and Finland-born Bengt Holmstrom on Monday (October 10) won the 2016 Nobel Economics Prize for their contributions to contract theory, helping the understanding of issues like the performance-based pay for top executives.
The Royal Swedish Academy of Sciences said on announcing the 8 million Swedish crown (928,000 U.S. dollar) prize that their work laid an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions.
Hart is economics professor at Harvard University while Holmstrom is professor of economics and management at the Massachusetts Institute of Technology.
"The short answer is that I certainly did not expect it and least at this time. So I was very surprised and very happy of course. I think the reaction of most people is a sense of things being surreal," Holmstrom told a news conference over the phone.
Hart's work has helped understanding which companies should merge and the right mix of financing and when institutions such as schools should be privately or publicly owned, the academy said in a statement.
Holmstrom's work helped how to formulate contracts for executives, the statement added.
The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.
Economics is the fifth of this year's Nobels. The prizes for physiology or medicine, physics, chemistry and peace were awarded last week. The literature prize is due on Thursday.
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